NEW YORK, Feb 12 (Reuters) - A major creditor in the Argentine bond litigation who has not agreed to participate in a proposed $6.5 billion settlement on Friday called the country’s decision to return to court in the dispute “baffling.”
Hedge fund Aurelius Capital Management issued the statement after Argentina on Thursday asked a federal judge in New York to vacate orders restricting it from servicing its restructured debts in light of last week’s settlement offer by the country.
Mark Brodsky, Aurelius’ chairman, said given “the choice between accepting the substantial haircut we have offered, continuing negotiations, and litigating, Argentina chose to litigate.”
“This is a baffling continuation of the failed strategy of the past,” he said in a statement.
Lawyers for Argentina had no immediate comment.
In court papers filed on Thursday, Argentina asked U.S. District Judge Thomas Griesa to lift injunctions he issued in the case if Argentina repeals two local laws regarding debt deals and pays any creditors who settle by Feb. 29.
Argentina’s lawyers said vacating the injunctions would allow it to tap global capital markets to fund the settlements and to remove an incentive for the remaining suing bondholders to not settle on “reasonable terms.”
Two out of six leading bondholders have already accepted the offer, court-appointed mediator Daniel Pollack said last week. The offer represents a 27.5 percent to 30 percent discount for creditors who filed claims of about $9 billion.
But others, including leading Aurelius and Elliott Management’s NML Capital Ltd, have not yet said if they would agree to take the deal.
They are among creditors who spurned Argentina’s 2005 and 2010 debt restructurings, which resulted in 92 percent of its defaulted debt being swapped and investors being paid less than 30 cents on the dollar.
The proposed settlement came less than two months after President Mauricio Macri took office and expressed his commitment to a deal.
The settlement was conditioned on the approval of the Argentine Congress, where Macri lacks a majority, and the lifting of injunctions Griesa issued in the case.
Griesa in 2012 ordered Argentina to pay the holdouts $1.33 billion plus interest when it serviced its restructured debt, pushed the country into default again in July 2014 after Argentina refused to honor it and failed to settle the dispute.
Griesa in October extended similar relief to holders of several billions of dollars more in defaulted bonds. (Reporting by Nate Raymond in New York Editing by W Simon)